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UK businesses grow at fastest pace in 5 years in July after COVID slump

Wed, 5th Aug 2020 09:31

LONDON, Aug 5 (Reuters) - British businesses in the services
and manufacturing sectors grew at the fastest rate in more than
five years last month as they began to recover from the effect
of the COVID-19 lockdown, a survey showed on Wednesday.

The IHS Markit/CIPS final composite Purchasing Managers'
Index (PMI) rose to 57.0 from 47.7 in June, its highest since
June 2015 and close to the provisional flash reading of 57.1.

The services PMI also rose, to a five-year high of 56.5 from
June's 47.1, again a fraction below the flash reading.

"UK service providers are starting to see light at the end
of the tunnel after a record slump in business activity during
the second quarter of 2020," IHS Markit's economics director,
Tim Moore, said.

The PMI numbers reflect the rate of growth, not the level of
output, and some economists says Britain could take years to
recover the record 25% of output lost over March and April.

Restaurants, cafes and pubs reopened to diners and drinkers
on July 4 after more than three months of lockdown, which only
began to ease substantially in mid-June when non-essential shops
resumed trading.

Retail sales were almost back to their year-ago levels, and
house purchases picked up strongly in June.

But other sectors such as entertainment and arts venues have
been much slower to recover, and some Bank of England officials
have warned that growth risks levelling off after an initial
burst of pent-up demand.

The composite PMI's employment index stayed unchanged from
June to July and remained well below 50, suggesting most
employers plan to cut staff.

Britain's official unemployment rate has yet to rise, due
largely to a government job support programme that ends in
October and requires employer contributions from this month.

"The weakness of the employment figures reported in July is
clearly a cause for concern and likely to hold back the
longer-term recovery in business and consumer spending," Moore
(Reporting by David Milliken; editing by John Stonestreet)

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